NEVADA
From Site Selection magazine, September 2009
Ace in the Hole
C
alifornia is just down the road, and much of the reason for opening a western U.S. operation is its southern California customer base. But Scienceuticals, a South Carolina-based contract manufacturer of cosmetics, pharmaceuticals and personal care products, never seriously considered a Golden State location.
Reno, Nev., had a house edge over other western metros, including Boise, Idaho; Portland, Ore.; and Albuquerque, N.M., when the company decided to expand operations beyond its 35,000-sq.-ft. (3,250-sq.-m.) administrative, R&D and production facility in Summerville, S.C. That edge, says Scienceuticals CEO Donald Hayden, included proximity to the southern California market, the right labor force and an economic development atmosphere conducive to becoming operational quickly.
"We needed additional capacity, but the customer base on the West Coast was the driver for putting a facility there," says Hayden. "We needed to better serve our West Coast customers, and we wanted to tap into the market a little more. Typically, customers want to be geographically or strategically close to their manufacturers – they're not interested in the additional costs associated with shipping and time and so forth."
Scienceuticals has sales offices in New York and California and is establishing an R&D presence in Shanghai, China. But customers – mainly department stores and drug store chains – also want to visit the production facility from time to time to monitor new products as they come online. The Reno site will satisfy that requirement more easily for western customers while reducing logistics costs, among others.
Reno: The Right Stuff
"Manual labor and space are big costs in our business, as is energy," says Hayden, "and that ruled out California. We looked at several other western states, and it came down to which location is closest to most of our customers; space costs, which were lower than in other areas; energy costs and labor costs, which are comparable to the other areas. We are quite happy with the labor force we found in Reno." Financial incentives from the state played a supporting role.
Most of the employees in the Summerville operation, which the Reno one will resemble, work in production roles. On the technical side, five bench chemists each create about 10 new products per week.
Economic Development Authority of Western Nevada (EDAWN)
Nevada Commission on Economic Development
University of Nevada, Reno: Center for Regional Studies
Nevada Small Business Development Center
By year's end, about 25 people will work in the 55,000-sq.-ft. (5,110-sq.-m.) operation in Reno. But it will be running smoothly well before then thanks to the area's business climate, says Hayden.
"The local economic developer [Economic Development Authority of Western Nevada] was and continues to be very helpful," he explains. "Also, it's a small community, which we like for the same reasons we like the Charleston, S.C., area – it's easy to speak to the right people to get things done quickly."
As of mid-July, the 3,000-sq.-ft. (278-sq.-m.) lab was operational along with the front office, and some other functions. Hayden anticipates full production by September. Expansion of the Reno operation is likely in due course and can be accomplished in the same building.
Site Selection: What is the role of the Center for Regional Studies in the Reno business community?
Brian P. Bonnenfant: The Center for Regional Studies provides data – demographic, employment, revenue and other types – to parties looking to open businesses or sell property or apply for grants. Rather than rely on national vendors of data for areas of Nevada that are growing rapidly, we approached local governments to get agreements to acquire confidential information, and we apply GIS tools to map it and aggregate it to help the whole spectrum of people who need that information. Some clients have bought the national data and have a high-level feel for the area, but they need to look deeper. That's where we come in.
SS: What are your ties to the area?
BPB: My great-grandfather was born here in 1879, so I'm a fourth-generation Renoan. Other than nine years away at college and in the military, I've been here. Work as a gold exploration geologist brought me back to Reno. I doubt I'll ever leave again.
SS: What do you like most about Reno?
BPB: It's the region as a whole. Reno's not too big or too small, the traffic and the crowds are not a problem. It's four hours to the ocean, we have the Sierra Nevada Mountains, Yosemite, and to the east is high desert with an open-range feel where you can get away from the crowds pretty quickly. The climate and geography are great here.
SS: What are the region's best attributes for business?
BPB: Location, location and location. We're at the intersection of I-80 and US-395. The transportation network makes it easy to get up into the Cascades and Idaho and over into Utah and south down to Arizona and of course California is right here. Taxes and regulations are somewhat less than in other states, so businesses like that. Nevada is very pro-business. Also, the climate and the quality of life. People who like to hike and bike and swim and ski really like the area. We get a lot of newcomers because of that.
SS: What would make the area even more attractive to businesses?
BPB: Everyone is trying to diversify, which means more manufacturing, more high-tech, maybe more healthcare. In order to do that, especially in Reno, we need to fill in the linkages between the suppliers and manufacturers. We have companies that come here and really want to set up shop but the key industry that provides them with some components is missing. I hope the economic development authorities are starting to focus on the supporting industries. That gets overlooked too often. In this geography, if the suppliers are not here, new industries have to pay a lot to transport components into the area.
SS: How does water factor into the area's ability to attract industry?
BPB: A lot of manufacturing is water-intensive, and we can't get those industries more water than is here. So we have to go after light-water manufacturing. There are areas, such as Winnemucca, two hours east on I-80, that have a lot of water, so they could land a heavy water user up there. But in the Reno vicinity, there's a big battle brewing for water between upstream farmers and downstream users like fish hatcheries and fishing interests. That issue is just now coming to the surface.
SS: What do most people not know about Reno?
BPB: That we are 450 miles [724 km.] north of Las Vegas. San Francisco and Los Angeles are closer to Reno than Las Vegas is. Too many people think Reno is a Vegas suburb. We're tied more closely geographically and maybe culturally to the Bay Area and the Sacramento Valley than to Las Vegas.
SS: Which perception of Reno needs to be changed?
BPB: We've always been seen as a cow town and a place where you'll lose your teeth in a bar, or as a strictly gambling town. Actually, we used to be a cow town, but the ranchers have all sold out to housing developers in the last 10 to 20 years. We're no longer a cow town or a strictly gaming town. We've diversified quite a bit into distribution, industrial parks and so forth. We see ourselves as an adventure destination, not a gambling mecca. The Indian casinos in California really caused us to ramp up our diversification efforts. We shut down several casinos after Indian gaming started. About 15 or 20 percent of the work force is gaming nowadays.
SS: How will Reno be different five years from now?
BPB: The whole community will be interested in and involved in determining where we want to be after economic recovery. More attention will be paid to the planning of residential developments and commercial developments. We'll be a little grayer, too, because the retiring baby boomers like this area. We'll be a little less focused on gaming and hopefully more focused on renewable energies, because we have a lot of the sources for that here. Downtown will likely look different with two large projects now in the planning process.
Something that really concerns me and others is California's budget crisis. If they cut as much as they have to cut, which is a quarter of their general fund, we're nervous about the impact on this region, because we're so close. Among other reasons, Californians are our main source of tourists – they come here and spend money. Without that, our recession will be prolonged.
Reno, Nev., had a house edge over other western metros, including Boise, Idaho; Portland, Ore.; and Albuquerque, N.M., when the company decided to expand operations beyond its 35,000-sq.-ft. (3,250-sq.-m.) administrative, R&D and production facility in Summerville, S.C. That edge, says Scienceuticals CEO Donald Hayden, included proximity to the southern California market, the right labor force and an economic development atmosphere conducive to becoming operational quickly.
"We needed additional capacity, but the customer base on the West Coast was the driver for putting a facility there," says Hayden. "We needed to better serve our West Coast customers, and we wanted to tap into the market a little more. Typically, customers want to be geographically or strategically close to their manufacturers – they're not interested in the additional costs associated with shipping and time and so forth."
Scienceuticals has sales offices in New York and California and is establishing an R&D presence in Shanghai, China. But customers – mainly department stores and drug store chains – also want to visit the production facility from time to time to monitor new products as they come online. The Reno site will satisfy that requirement more easily for western customers while reducing logistics costs, among others.
Reno: The Right Stuff
Most of the employees in the Summerville operation, which the Reno one will resemble, work in production roles. On the technical side, five bench chemists each create about 10 new products per week.
Economic Development Authority of Western Nevada (EDAWN)
Nevada Commission on Economic Development
University of Nevada, Reno: Center for Regional Studies
Nevada Small Business Development Center
By year's end, about 25 people will work in the 55,000-sq.-ft. (5,110-sq.-m.) operation in Reno. But it will be running smoothly well before then thanks to the area's business climate, says Hayden.
"The local economic developer [Economic Development Authority of Western Nevada] was and continues to be very helpful," he explains. "Also, it's a small community, which we like for the same reasons we like the Charleston, S.C., area – it's easy to speak to the right people to get things done quickly."
As of mid-July, the 3,000-sq.-ft. (278-sq.-m.) lab was operational along with the front office, and some other functions. Hayden anticipates full production by September. Expansion of the Reno operation is likely in due course and can be accomplished in the same building.
Reno Confidential: An Inside Look at Nevada's Second City
Brian P. Bonnenfant is project manager at the Center for Regional Studies at the University of Nevada, Reno.
Brian P. Bonnenfant: The Center for Regional Studies provides data – demographic, employment, revenue and other types – to parties looking to open businesses or sell property or apply for grants. Rather than rely on national vendors of data for areas of Nevada that are growing rapidly, we approached local governments to get agreements to acquire confidential information, and we apply GIS tools to map it and aggregate it to help the whole spectrum of people who need that information. Some clients have bought the national data and have a high-level feel for the area, but they need to look deeper. That's where we come in.
SS: What are your ties to the area?
BPB: My great-grandfather was born here in 1879, so I'm a fourth-generation Renoan. Other than nine years away at college and in the military, I've been here. Work as a gold exploration geologist brought me back to Reno. I doubt I'll ever leave again.
SS: What do you like most about Reno?
BPB: It's the region as a whole. Reno's not too big or too small, the traffic and the crowds are not a problem. It's four hours to the ocean, we have the Sierra Nevada Mountains, Yosemite, and to the east is high desert with an open-range feel where you can get away from the crowds pretty quickly. The climate and geography are great here.
SS: What are the region's best attributes for business?
BPB: Location, location and location. We're at the intersection of I-80 and US-395. The transportation network makes it easy to get up into the Cascades and Idaho and over into Utah and south down to Arizona and of course California is right here. Taxes and regulations are somewhat less than in other states, so businesses like that. Nevada is very pro-business. Also, the climate and the quality of life. People who like to hike and bike and swim and ski really like the area. We get a lot of newcomers because of that.
SS: What would make the area even more attractive to businesses?
BPB: Everyone is trying to diversify, which means more manufacturing, more high-tech, maybe more healthcare. In order to do that, especially in Reno, we need to fill in the linkages between the suppliers and manufacturers. We have companies that come here and really want to set up shop but the key industry that provides them with some components is missing. I hope the economic development authorities are starting to focus on the supporting industries. That gets overlooked too often. In this geography, if the suppliers are not here, new industries have to pay a lot to transport components into the area.
SS: How does water factor into the area's ability to attract industry?
BPB: A lot of manufacturing is water-intensive, and we can't get those industries more water than is here. So we have to go after light-water manufacturing. There are areas, such as Winnemucca, two hours east on I-80, that have a lot of water, so they could land a heavy water user up there. But in the Reno vicinity, there's a big battle brewing for water between upstream farmers and downstream users like fish hatcheries and fishing interests. That issue is just now coming to the surface.
SS: What do most people not know about Reno?
BPB: That we are 450 miles [724 km.] north of Las Vegas. San Francisco and Los Angeles are closer to Reno than Las Vegas is. Too many people think Reno is a Vegas suburb. We're tied more closely geographically and maybe culturally to the Bay Area and the Sacramento Valley than to Las Vegas.
SS: Which perception of Reno needs to be changed?
BPB: We've always been seen as a cow town and a place where you'll lose your teeth in a bar, or as a strictly gambling town. Actually, we used to be a cow town, but the ranchers have all sold out to housing developers in the last 10 to 20 years. We're no longer a cow town or a strictly gaming town. We've diversified quite a bit into distribution, industrial parks and so forth. We see ourselves as an adventure destination, not a gambling mecca. The Indian casinos in California really caused us to ramp up our diversification efforts. We shut down several casinos after Indian gaming started. About 15 or 20 percent of the work force is gaming nowadays.
SS: How will Reno be different five years from now?
BPB: The whole community will be interested in and involved in determining where we want to be after economic recovery. More attention will be paid to the planning of residential developments and commercial developments. We'll be a little grayer, too, because the retiring baby boomers like this area. We'll be a little less focused on gaming and hopefully more focused on renewable energies, because we have a lot of the sources for that here. Downtown will likely look different with two large projects now in the planning process.
Something that really concerns me and others is California's budget crisis. If they cut as much as they have to cut, which is a quarter of their general fund, we're nervous about the impact on this region, because we're so close. Among other reasons, Californians are our main source of tourists – they come here and spend money. Without that, our recession will be prolonged.
Site Selection Online – The magazine of Corporate Real Estate Strategy and Area Economic Development.
©2009 Conway Data, Inc. All rights reserved. SiteNet data is from many sources and not warranted to be accurate or current.
©2009 Conway Data, Inc. All rights reserved. SiteNet data is from many sources and not warranted to be accurate or current.